Suppose you bought a $58 share a month ago. It paid a dividend of $0.50 today and then you sold it for $62. What was your return on the investment?
A)7.80%
B)7.76%
C)7.98%
D)7.01%

Question

Quizplus · Accepted Answer

First, calculate the total dividend received:
$0.50 dividend per share x 1 share = $0.50

Next, calculate the total gain from selling the share:
$62 selling price - $58 purchase price - $0.50 dividend = $3.50 gain

Finally, calculate the return on investment:
$3.50 gain / $58 purchase price = 0.0603 or 6.03%
But this return is for a period of 1 month, so we need to calculate the annualized return:
6.03% x 12 months = 72.36%
Therefore, the answer is 7.76%, which is the closest option, A.

Suppose You Bought a $58 Share a Month Ago